Trade deficit drops by 90%

ZIMBABWE’S trade deficit dropped by 90% to $22,1 million in February this year with analysts attributing the decline to foreign currency shortages.

Figures released by the Zimbabwe Statistics Agency (ZimStat) show that in February, the country imported goods and services worth $370,5 million against exports of $348,4 million.

In the same period last year, imports stood at $574,9 million and exports at $346,3 million, giving a trade deficit of $228,6 million.

Exports were flat on the prior year’s figures, while imports fell by 36%.

“It’s mainly a reflection of foreign currency challenges obtaining in the economy. Remember, we are an import dependent economy,” Persistence Gwanyanya, an economic analyst, said.

The bulk of the country’s imports in the period under review remained heavily skewed towards consumptive products, which comprise fuel, wheat, medicines and vehicles, while exports includes gold, flue-cured tobacco, nickel and chrome, among others.

Largest foreign currency earners were tobacco ($83,8m), followed by gold ($82,8m), nickel mattes ($52m), as well as nickel ores and concentrates ($34m).

The top four imports in the period under review were ranked as diesel, which guzzled $59 million, followed by unleaded petrol at $30m, crude soyabean meal ($5,8m) and broken rice ($3,5m).

Gwanyanya said the challenge with Zimbabwe was that the exports were driven by commodities, and not by industry production.

In his 2019 monetary policy statement, Reserve Bank of Zimbabwe governor John Mangudya indicated that the country’s external sector position had largely remained under considerable pressure due to excessive foreign currency demand against foreign currency inflows.

He also said the pressure was manifest through large and persistent trade, including current account deficits that the economy has been recording since 2009.

While exports of goods and services have been on an upward trend, Mangudya said this had been offset by the increase in imports of goods and services on the back of domestic supply gaps and rising international oilprices.